The Launch Of Wonder Home Finance, The RK Group’s Newest Venture

Grains, edible oils, utensils, fuels,aromatics, printing, moneylending, cinema,ship chandling etc.etc, a whole hodgepodge of seemingly unrelated businesses of the PSTS, PSTP, PSTC family meant I always knew it was possible for people to be simultaneously present and successful in widely divergent businesses.I also knew that if I listened carefully enough to the insiders,I’d understand the method behind what to outsiders looks like madness in these ventures.Ask me too how PSTS,PSTP&PSTC became shadows of themselves,and I have my views.Unfortunately such study is only good enough to tell me what not to do,what to guard against or insure.And all brakes is no good when you are setting out to build.What I really need in my position today are insights into the habits of P,S &T to which I could attribute their success.And to figure that out,I have nothing more than a few old papers and familylore affected by a few generations of retellings to rely on.And perhaps rely a bit on my gut instincts bred by the DNA we share.

So as luck would have it,when I heard of the story of another family of three brothers,in another small town,in another far corner of the country, that in contemporary times rose from grain to become the largest producers of marble in the world and then went on to set up a state of the art cement manufacturing unit in collaboration with ThyssenKrupp and Pfeiffer with the aim to become the foremost name in premium cement in the country and was now venturing into housing finance ,I simply had to attend the Wonder Home Finance launch event in Jaipur on Aug1 and try to learn as much as I could by keeping my eyes and ears open.

And here,dear readers, follows all that I gleaned from my visit :

First to speak at the event was Mr Ravindra Singh Mohnot,Management Advisor RK Group.A very softspoken person,he credits the success of Mr Ashok Patni,Chairman-RK Group,whom he has known since the start of his entrepreneurial journey, to his Bhagya(fortune) and hard work.And even as he spoke,I was struck by the very good fortune of an entrepreneur meeting up with an accounts professional who didn’t limit him.Of a story of two people who grew together.

Next to speak was,the again very soft spoken, Mr Ashok Patni who spoke about how his training of providing quality products and good value even to strangers in the grain business,served him well in the marble and cement business.His words taught me to value anew the old story my mother often repeated throughout my childhood of the custom in her father’s business to always stock the finest quality and give every customer a little more than they had purchased.Perhaps there is something more profound in this story, that I stuck in giving exact measure and not letting others use me,have to yet learn. After all my grandfather is long gone but his reputation survives and such intangibles have their own value not easily counted in rupees and paise.

Remember I said that insiders always have a reason that makes sense to them about why they strike out into what looks like unrelated businesses?Mr Ashok Patni had a very good reason that he spoke about with passion and its probably going to be a pretty good strength of the new business that might not be readily obvious to outsiders looking in.Mr Ashok Patni spoke about how acquiring a house of one’s own is a landmark in every person’s life and how he is often asked to assist people in achieving this dream.Wonder Housing Finance is his way of being able to assist many more people achieve their dreams of having a house of their own and at the same time do his share to achieve the Government’s Vision of Housing For All by 2022.Now,a new business needs customers,and here, hidden in plain sight,I was happy to note,were some of the potential customers of Wonder Home Finance.People who had faith in Mr Patni and were so unlikely to hesitate taking a loan from a new and unknown company.

Next to address us were Mssrs. Raunak Mohnot ,CFO and Head – Strategy & Marketing,Wonder Home Finance Ltd and Sanjay Rajawat ,CEO and Director ,Wonder Home Finance Ltd ,two co-founders and CAs by training,to tell us how they proposed to grow the new company and distinguish it from the remaining 90+ housing finance companies operating in India.Here are the details :

1.As Rajasthan was the Karmabhoomi of the RK Group,and they knew Rajasthan and its people best,they decided to start by opening 29 branches across the state,covering 70% of the households in the state, and then starting operations in Gujarat, Maharashtra and MP in the first year itself.As of 1 August, 9 branches (Jaipur-4, Udaipur, Bikaner, Jodhpur, Chittorgarh &Rajsamand)were operational.Their goal of course is to ultimately have a pan-India presence and target the market of an estimated need for 70 million new homes in the next decade.

2.Apparently,Mr Sanjay Rajawat was happy to start work using the free office space of Wonder Cement.But Mr Ashok Patni was insistent on Wonder Home Finance having its own corporate office.Personally,I’m yet undecided what I like the sound of better;Mr Sanjay Rajawat’s focus on economy and making do in a start-up till it puts forth profits or Mr Ashok Patni’s commitment to see that Wonder Finance is not hobbled for want of money and maintains arms length distance from his other businesses.

3.Wonder Home Finance is to focus on people who are not likely to be serviced by housing loans from banks.

4.They are going to focus on affordable housing in rural and semi-urban markets and are happy to finance the building of homes in panchayat areas.

5.They were going to offer retail home loans,loans for the construction of homes and loans for the repair and renovation of homes.Additionally they were going to offer MSME loans where homes were to serve as collateral.They had in place the requisite licence from the National Housing Bank.

6.To man their branches,they were hiring locals with the requisite financial services experience and local knowledge to be able to talk to customers in their own dialect,with an understanding of local housing issues.And they were hiring people likely to spend the next 10-15 years at least with the company.This focus on the long term was pure music to my ears!

7.To make the customer experience of availing a home loan as painless as possible they have a vision of doorstep service where company representatives would visit the homes of potential clients and help them with requisite documentation.They have also apparently gone over all the customary legal documentation necessary for the approval of a home loan and simplified them as much as possible and reduced the number of signatures required to the bare minimum.

8.At the back-end, to speed up the scrutiny and loan sanction process,they are developing an android app , that would run on any basic android smartphone available with rural youth to allow their company representatives to scan and upload documents.The app also has a loan eligibility/EMI calculator.

9.Mr Sanjay Rajawat also had some calculations to show how including income tax-deductions and by availing eligible subsidies,investing one’s savings in buying one’s home is an excellent financial proposition.

Last to speak was Mr Tarun S. Chauhan ,Management Advisor RK Group,a former adman.Having worked his magic in creating brands such as RK Marbles and Wonder Cement out of commodities such as marble and cement,he was to do the same for Wonder Home Finance.His was the hand behind the newly launched Wonder Home Finance Logo,a home inside a ‘W’.He also had a pretty catchy jingle in the Rajasthani for Wonder Home Finance. Great for radio.And I suppose the videos we got to watch were also his work. Wonder Home finance plans on reaching people through TV, radio, newspapers, events, outdoor advertising, including vehicles driving through the areas surrounding the various branch offices and social media.Unfortunately,as some gentlemen of the press were insistent that Mr Chauhan wind up fast so as not to cut into their personal one on one time with Mr Ashok Patni,not much more could be said.A pity as his idea of branding and promoting Wonder Cement using backyard cricket is brilliant,and I would have loved to hear more of his thoughts about making Wonder Home Finance stand out from the vast array of housing finance companies.

Among the questions from the press that followed thereafter were:

1.Why Mr Ashok Patni chose this particular point in time when the real estate sector was down for many quarters to launch his new venture ?His answer was that lack of buoyancy in prices had driven all investors hoping to flip properties within a short time away from the market.However,it had in no way reduced the genuine need of people to have a suitable home of their own,for their self use.

2.Then there was the question of what sort of interest rates would the company be offering and what would be its own cost of funds ? Mr Sanjay Rajawat answered the question saying that they could access funds at 9-9.5% and were planning on offering home loans priced at 11-16% depending on the risk-profile of the borrower.

Then finally came my turn to ask questions.

All the literature of the company mentioned affordable housing in rural and semi urban areas.Serving customers who were not likely to advanced home loans by banks.And there was talk about trying to get borrowers eligible subsidies. However,in Mr Sanjay Rajawat’s powerpoint presentation was a slide showing calculation of benefits for people in the 30% tax slab and in the powerpoint on the android app to be launched ,the income entered was 50,000pm. So I was determined to drill down and figure out just how the folks at Wonder Home Finance were defining affordable and what would be the lowest threshold of eligibility for a person to be considered loanable. The question being,if all could afford a house by 2022!

The smallest EMI that the company offers is in the 5K range and the lowest incomes they are thinking about are round 10K pm and their definition of affordable is a house of upto 25lakhs. Though frankly I don’t see how 10k pm earners would be anywhere near the 30% incometax bracket! Or the 50K earners ,presumably the 25lakh home buyers even……

Furthermore,my observation is that what deters a lot of buyers,even those with the means, is the lack of clarity on titles and the rampant lack of compliance with building codes which are incalculable risks that the buyer is going to be saddled with.It’s to be doubly certain that there is no fatal flaws with the papers,that people prefer to purchase via home loans from banks,perhaps even select from pre-approved projects where hopefully due diligence from the bank’s end ensures that all is in order.So I wanted to know if Wonder Home Finance had the means to assist customers with due diligence or had a list of pre-approved properties.They have no pre-approved properties so far,however as the deeds of the property would be assigned to them as collateral,they would be checking to ensure that there is enough proof of ownership.No more,no less.

So overall what is my assessment ? Do I recommend taking out a home loan from Wonder Home Finance ?

1.For a start-up I was impressed about the almost test-book perfect launch of the business.

2.The management team has the requisite experience between them and as as best I could tell were working well together .Marketing,advertising,sales,thought had gone into them.Product line-up I didn’t see but thought had gone into the back end processes of the business.

3.Opening with 9 branches on Day1. Commendable.

4.All round me in the venue I saw evidence that the company made it a point to hire quality talent and pay well for good work.

5.And best of all there was an enthusiastic espousal of proven technology to gain the competitive edge.

So overall a good impression.Good enough that I’m willing to risk a 5K or so per month purchasing some place I can use as a base for a few days a month as I explore Rajasthan,so full of wide open spaces,old neighbourhoods ,great local food and culture to explore and excellent shopping to die for.

Wonder Home Finance speaks of going to the customer,not expecting the customer to make repeat visits to them. I’ve spoken to them. They’ve suggested Udaipur as ideal for my requirements.They have my contact details.So dear readers,if there is any further progress and I purchase a place in Rajasthan via Wonder Home finance,be sure I’ll blog about the experience and the terms of the loan.Till then No Further Comments.